Previously, we covered key benefits, features and relationship between various entities involved in setting up foundation for vendor management. Managing vendor performance is crucial for ensuring that third-party partners deliver value, meet commitments, and align with business goals. ServiceNow makes this easier by centralizing vendor data, measuring KPIs, automating scorecards, and enforcing governance.
Here’s a simple strategy to set up vendor performance management in ServiceNow.
- Collate and Consolidate Vendor Data
The journey starts with visibility. Most organisations don’t even have a single view of all their vendors — information is scattered across Excel sheets, emails, and procurement systems. Without it, you can’t measure performance consistently.
For most of organisations, vendor’s source of truth is the procurement system or ERP itself.
First step towards measuring vendor performance to collate all the vendor information at least with a few key details – Vendor name, Vendor manager, vendor type (Software, hardware, services) and their current status and additionally focus on gathering services offered, vendor contracts and SLA commitment. All of the above-mentioned information is key to starting a robust journey on vendor performance management.
Once data is collected, you may want to ensure the relationship among vendors (parent-child or subsidiaries) is also captured effectively and ensure vendor data is of good quality. Once you have this clean foundation in vendor-related tables, you can start building reliable performance insights.
- Define Performance Measurement Criteria (KPIs & Metrics)
Once you know who you’re managing, the next step is to decide how you’ll measure them. This is where KPIs come in. The right KPIs will depend on your business priorities, but some common ones include which are included OOB are
- Vendor or Customer Satisfaction – Measures how satisfied stakeholders or end users are with the vendor’s services through surveys and feedback.
- SLA Adherence – Tracks whether the vendor consistently meets agreed service levels and response/resolution timelines.
- Average Availability – Evaluates the uptime of vendor-delivered services to ensure business continuity.
- Number of Requests/Incidents Created – Indicates the volume of service or support requests raised, helping assess demand and workload.
The key is to avoid measuring everything. Instead, pick the few that reflect what really matters for your organization after discussions with vendor managers, service owners and key stakeholders. The ones which most stands out are SLA adherence and average Availability, which provides tangible and measurable outcomes
- Assign Weightages and Threshold
The next step after identifying key API is define the scoring criteria against each of the KPI. This process starts by assigning a weight to each KPI within a KPI Group.
For some business owners and process, vendor performance is majorly dependent on SLA Commitment while for others support customer services needs to be evaluated with CSAT scores. By assigning weightages to each KPI, organizations ensure that performance scoring aligns with strategic priorities and type of vendors providing different kinds of services.
ServiceNow allows these weightages to be embedded within KPI and KPI groups itself. This enables the platform to calculate overall vendor performance scores automatically and consistently. The result is a standardized, objective assessment that eliminates subjectivity and provides a fair basis for comparing vendors across the portfolio.
Here are the OOB weights assigned to different KPIs within a KPI group, amounting to 100%. Please ensure to associate the vendor to their respective KPI group based on the service provided, as well as validating the weight score assigned to each KPI within a KPI group.
Threshold further gives target ranges for a group of KPIs to determine whether a vendor is meeting, exceeding, or falling short of expectations. This is a good indicator when evaluating all vendors in the list view to identify if they are underperforming.
Continued in next blog.
